MUMBAI: The private sector began 2025 on a slower note as the growth momentum eased as the pace of new business intakes softened in January. Overall output grew at its slowest rate since November 2023, according to a private survey, which also said the manufacturing index did tick up in the month.
According to the HSBC flash Purchasing Managers Index (PMI), which tracks monthly changes in combined output from manufacturing and services, dropped from 59.2 in December to 57.9 in January, signalling the slowest expansion in 14 months. However, the reading is not negative as a any number above 50 is a growth expansion.
Sentiment among service providers also dipped to a three-month low amid concerns about rising competition, the survey noted Friday.
The latest flash PMI, compiled by S&P Global for HSBC, highlights a slowdown in the services sector that offset robust growth in manufacturing in the reporting month.
In more bad news, prices for goods and services rose sharply due to mounting cost pressures.
However, the manufacturing sector outperformed expectations, with the PMI climbing from 56.4 in December to 58 in January, its strongest reading since July 2024. The index, a composite measure of new orders, output, employment, supplier delivery times, and inventory levels, indicates improved factory conditions. The flash manufacturing PMI output index also rose to 60.3 in January from 59 in December.
In contrast, the services sector saw a deceleration, with the flash PMI business activity index declining from 59.3 in December to 56.8 in January.
“The manufacturing sector started the year strong, with output and new orders bouncing back from a relatively weak December quarter. The rise in new export orders is especially noticeable, and the easing of input cost inflation is also good news for manufacturers," said Pranjul Bhandari, the chief economist at HSBC India.
However, she cautioned, “the cooling in growth in new domestic business in the services sector, highlights a potentially emerging weak spot in the economy. New export business for service providers, on the other hand, looks set to maintain its growing momentum.”
Business confidence improved in January, buoyed by manufacturers’ highest optimism levels since last May. However, sentiment among service providers dipped to a three-month low amid concerns about rising competition, she noted.
Manufacturers ramped up input purchases, accelerating pre-production inventory growth as supplier delivery times improved. Conversely, stocks of finished goods dropped to their lowest level in nearly three years.